Nicosia | Cyprus’s President
Nicos Anastasiades
has sworn in his new Finance Minister, the second of his six-week-long administration after the government took more steps to ease banking restrictions in the island nation.

Haris Georgiades
, a 40-year-old economics graduate from the University of Reading and former labour minister in Mr Anastasiades’s Disy party, replaces
Michael Sarris
, a former banker who resigned earlier in the week to aid the work of a committee set up to probe the collapse of the country’s two biggest lenders last month.

Dr Sarris resigned eight days after helping the government clinch a second bailout to stave off financial collapse. An earlier attempt to tax all savers at the nation’s banks led to protests and political turmoil.

Mr Georgiades takes over an economy boasting the euro zone’s first capital controls, designed to prevent a run on banks and uncertainty about how the country will recover from the hit to its reputation as a financial centre.

“We know the impact on the economy will be bad," said Lefteris Farmakis, an analyst at Nomura International in London. “It remains to be seen how quickly capital mobility and normal business can be reinstated so we can gauge how badly the economy will be affected."

Cyprus was granted two extra years, to 2018, to implement measures linked to its bailout, government spokesman Christos Stylianides told reporters on Tuesday after the government wound up talks with the so-called troika of officials representing the International Monetary Fund, the European Central Bank and the European Union.

The accord, which details the fiscal terms and structural measures required for the €10 billion rescue, will be discussed at a euro working group meeting of finance officials on April 4.

Before departing, Dr Sarris said he couldn’t give an estimate for this year’s economic contraction and that the beginning of 2014 will be equally hard. The European Commission ­predicted before the rescue that the economy would shrink by 3.5 per cent this year.

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Successfully winding up the bailout agreement, which has been pending since last June, will secure financing for Cyprus from May, Dr Sarris said. The government has €1.4 billion of bonds maturing on June 3.

Moody’s Investors Service downgraded Cypriot covered bonds to Caa2.

The agreement with the troika ­targets a primary deficit of 2.4 per cent of gross domestic product this year and includes €351 million, or 2.1 percent of GDP, of expenditure cuts and revenue increases, the Phileleftheros newspaper said on April 1, citing a draft of the ­document. The rescue loans will have a 2.5 per cent interest rate and be repaid over a 22-year period, state-run Cyprus News Agency said on Tuesday, citing Mr Stylianides.

Cyprus reached an agreement with euro zone governments on March 25 to impose losses on uninsured depositors at the country’s two biggest banks, Bank of Cyprus and Cyprus Popular Bank, which has been wound down, in return for the €10 billion of aid from the IMF, ECB and EU. The government had closed all banks to prevent deposit flight following the March 16 decision to levy a tax on all savers.

Cyprus this week eased capital ­controls on some transactions, the third tweak since a decree on the controls issued by the Finance Ministry. Banks reopened under tight restrictions, including a limit on daily withdrawals of €300 a person, on March 28. The EU has said it will continue to monitor the controls.

“It’s obvious the EU will push Cyprus to lift the restrictions as soon as possible," said Mr Farmakis. “In a monetary union, capital controls are a bad thing if they are more than temporary."

Dr Sarris, a retired World Bank official who was chairman of Cyprus Popular Bank last year, ­submitted his resignation after Mr Anastasiades, elected February 24, established a commission to investigate the reasons for Cyprus’s banking crisis and identify those responsible.

Zeta Emilianidou
will replace Mr Georgiades as labour ­minister. Mr Anastasiades will meet his new cabinet after Mr Georgiades is sworn in.